Intellectual Property Law

Over the last decade, a growing consensus has emerged: there are too many patents, and they are causing a host of problems. These problems include patent “trolling,” patent “wars,” and other wasteful societal costs. In explaining this patent overabundance, some scholars have pinpointed the United States Patent Office, the governmental body responsible for issuing patents, as the main culprit. Others have blamed patent holders themselves, identifying a number of incentives these parties have to pursue patents even in cases where doing so makes little economic sense. Overall, these analyses thus typically assume a high and relatively uniform demand for patents among inventive parties—one that the United States Patent Office is only too willing to satisfy.

Yet this focus on excessive patenting obscures the reality that parties likely differ significantly in their demand for patents and other forms of intellectual property. In economic parlance, different inventive parties are likely to exhibit different “elasticities,” or sensitivities, in their demand for patents and other types of intellectual property. This Article uses economic principles to disaggregate intellectual property demand by highlighting a number of factors that may affect a party’s demand for patents and other forms of intellectual property. It argues that resource-constrained parties are more likely to exhibit more elastic demand for patents, meaning they are more sensitive to the costs of patenting, both in general and relative to the costs of other intellectual property forms. As a result, rising costs of patenting are more likely to lead resource-constrained parties to forego patenting and rely on alternative, cheaper forms of intellectual property protection when available. Well-capitalized parties, on the other hand, are more likely to exhibit relatively inelastic, high demand for patents, regardless of the costs of other intellectual property types that may otherwise function as substitutes. Thus, well-capitalized parties tend to patent en masse and complement patenting with additional intellectual property protections when available.

Design—which encompasses everything from shape, color, and packaging to user interface, consumer experience, and brand aura—is the currency of modern consumer culture and increasingly the subject of intellectual property claims. But the law of design is confused and confusing, splintered among various doctrines in copyright, trademark, and patent law. Indeed, while nearly every area of IP law protects design, the law has taken a siloed approach, with separate disciplines developing ad hoc rules and exceptions. To address this lack of coherence, this Article provides the first comprehensive assessment of the regulation of consumers’ aesthetic experiences in copyright, trademark, and patent law—what we call “the law of look and feel.” We canvas the diverse ways that parties have utilized (and stretched) intellectual property law to protect design in a broad range of products and services, from Pac-Man to Louboutin shoes to the iPhone. In so doing, we identify existing doctrines and principles that inform a normatively desirable law of look and feel that courts and Congress should extend throughout IP law’s protection of design. We argue that design law should protect elements of look and feel but remain sensitive to eliminating or mitigating exclusive rights in response to evolving standardization, consumer expectations, and context. Notably, our normative conception of design protection sometimes departs quite starkly from how courts have expansively conceptualized look and feel as protectable subject matter. Going further, we argue that the new enclosure movement of design, if not comprehensively reformed and grounded in theory, can erode innovation, competition, and culture itself.

The patent system uses exclusion to stimulate innovation. But a mounting body of evidence calls into question the assumption that innovation based on excluding others is the only, or even primary, way that the patent system supports innovation today. Nearly 50 percent of manufacturers got the idea for their most important new product from an outside source that shared it with them, 45–59 percent of patentees acquire patents in order to access the technology of others, and over 2,100 companies, including five of the top ten holders of patents, have committed to sharing their patents with others. But because the essence of a patent is the right to exclude, policymakers have paid relatively less attention to ways in which patents can be used to include and to diffuse technology. This paper focuses on the ways that innovators are modifying the patent system’s exclusionary defaults, employing open source approaches, licenses, pledges, contracts, defensive publication and patenting, and related mechanisms to share innovation—including with their rivals. This Article advocates supporting and encouraging, rather than just tolerating these uses of the patent system, for several reasons. First, as innovation takes place in open and closed modes, the patent system can increase its relevance to all types of innovation. Second, weaknesses in voluntary diffusionary arrangements—for example, the lack of enforceability of patent pledges or open source commitments, the use of patents subject to licensing commitments to seek injunctions, and the use of once-defensive patents for patent assertion —suggest that the policy environment for innovation could be improved. Finally, providing ways for patent holders to take voluntary steps to curtail or limit their rights can offer a more flexible and predictable framework for rebalancing the patent system than measures like imposing limits on patentable subject matter or compulsory licensing.

Despite Justice Scalia’s dissent and the claims of Aereo and its amici, this Note will argue that, when viewed on the whole, any potential fears that the Aereo decision could implicate the legality of cloud-based technology or affect copyright infringement analysis with respect to this industry are likely unwarranted. First, there are substantial structural differences between how Aereo operated and how cloud-based services (particularly remote storage systems) continue to run. Second, the Aereo decision is a narrow response particularly attenuated to that company’s practice of functioning like a traditional cable system while failing to pay the fees required by such systems when they rechannel broadcast networks’ signals. Thus, because the case addresses such a specific factual scenario, its holding is unlikely to be extended to other cloud-based services. To illustrate this point, Part I will discuss Aereo’s technology to clarify how the system physically functioned to stream practically live television through the Internet. Part II will analyze the key reasons why the Supreme Court found this particular technology to violate the networks’ rights, while also analyzing Justice Scalia’s concerns about potential fallout from the majority opinion, particularly with respect to the cloud industry. And finally, Part III will contrast Aereo’s technological infrastructure with that of several common cloud-computing service providers and will examine the shortcomings of the argument that Aereo leaves in flux: the legality of cloud-computing services and the copyright infringement analysis with respect to those services.

What happens when an iconic cartoon mouse and an internationally renowned, electronic dance music disc jockey face off? While this may sound like the making of a fictitious scenario, this was actually the underlying context of the 2015 trademark dispute between Walt Disney Company (“Disney”) and Joel Zimmerman —stage name “deadmau5” (pronounced “dead mouse”)—in which Disney challenged the trademark registration of deadmau5’s logo. Though short-lived, and likely best remembered for its attention grabbing headlines, the dispute is instructive as to how U.S. trademark law should adapt to international trademark disputes. While the deadmau5-Disney dispute ended by a settlement between the parties, it is extremely probable that there will be more trademark disputes with common factual underpinnings in the future; thus, the dispute raises more questions than answers.

As demonstrated by the recent Second Circuit decision in Christian Louboutin v. Yves Saint Laurent America Holding, Inc., a shoe can certainly offer a great deal of legal controversy. In September 2012, the Second Circuit upheld the validity of designer Christian Louboutin’s trademark for the color red on the soles of his shoes. Although Christian Louboutin and the fashion media have called the case a victory for color trademarks, Louboutin’s affirmation of the “aesthetic functionality” doctrine will likely make defending color trademarks harder in the future. Further, a survey of color trademark registration activity and case law reveals that the Louboutin decision is an outlier, and the overwhelming tendency of courts is to weaken color marks in infringement lawsuits. Therefore, color mark applicants and current color trademark holders face steep obstacles in registering and protecting their color marks, and this battle will likely become more challenging in the near future.

For years, the United States has included intellectual property (“IP”) law in its free trade agreements. This Article finds that the IP law in recent U.S. free trade agreements differs subtly but significantly from U.S. IP law. These differences are not the result of deliberate government choices, but of the capture of the U.S. trade regime.

A growing number of voices has publicly criticized the lack of transparency and democratic accountability in the trade agreement negotiating process. But legal scholarship largely praises the ‘fast track” trade negotiating system. This Article reorients the debate over the trade negotiating process away from discussions of democratic accountability to focus instead on the problem of regulatory capture. The Office of the U.S. Trade Representative (“USTR”) is exempt from the Administrative Procedure Act and functionally exempt from the bulk of the Federal Advisory Committee Act. As a result, the USTR is likely to be captured by private parties through information asymmetry and to negotiate against the public good. Subject matter areas that are subject to collective action problems, such as intellectual property law, are particularly likely to be captured in the USTR.

Imagine you are the CEO of a new company in Silicon Valley, California. The company recently developed a revolutionary laptop screen that is not only entirely scratch resistant, but also allows for 3-D viewing. The company just entered into a contract with Orange Computer to be the sole manufacturer of Orange’s newly advertised “Made in Silicon Valley” computer. Located among the terms of the contract is a license, which allows the company to use Orange’s applicable patent and trademarks. As a result, the company heavily invests in its new enterprise and begins to profit. A few months later, however, Orange recognizes massive losses since it did not account for higher business costs in Silicon Valley. This forces Orange to file for bankruptcy and reject the license, leaving your company unable to manufacture its product without infringing on Orange’s trademarks. This risks your company’s vitality and ultimate existence.

The scenario above illustrates an example of a modern business practice-trademark licensing-and its tension with bankruptcy law. In today’s “[n]ew [w]orld,” intellectual property (“IP”) is an extremely important economic asset for many companies. An owner of IP has the ability to either (1) prevent others from using it or (2) authorize its use to a third party through licensing. The latter practice of licensing has grown significantly in the global economy, as it is a substantial source of revenue for many companies. Additionally, using IP to secure lending from a bank has become popular. Nevertheless, the value of IP licenses is limited due to risks created by economic hardships, with trademark licenses particularly vulnerable in cases of bankruptcy. In fact, since 1988, out of 1100 bankruptcy filings concerning IP, over 600 involve trademarks.

The scope and enforcement of intellectual property (“IP”) laws are becoming salient, for the first time, to a wide cohort of U.S. and international communities. National and international legislation, including the Stop Online Piracy Act (“SOPA”), the PROTECT IP Act (“PIPA”), and the Anti-Counterfeiting Trade Agreement (“ACTA”), have generated protests online and in the streets by people who are concerned about the expansion of IP rights. Common to each of these proposals was an expansion of the use of criminal sanctions to deter IP violations. Many copyright owners and the associations that represent them support criminal enforcement of IP rights, including the use of imprisonment, to combat the threat of increased IP piracy on the internet and throughout a globalized economy. Others, including a heterogeneous coalition of scholars, activists, and internet-based companies like Google and Wikipedia, fear that using criminal sanctions to protect IP will expand already overgrown rights and chill valuable expressive and inventive behavior.

The copyright troll and the phenomenon of copyright trolling have thus far received surprisingly little attention in discussions of copyright law and policy. A copyright troll refers to an entity that acquires a tailored interest in a copyrighted work with the sole objective of enforcing claims relating to that work against copiers in a zealous and dogmatic manner. Not being a creator, distributor, performer, or indeed user of the protected work, the copyright troll operates entirely in the market for copyright claims. With specialized skills in monitoring and enforcing copyright infringement, the troll is able to lower its litigation costs, enabling it to bring claims against defendants that an ordinary copyright owner might have chosen not to.